SALT LAKE CITY — Political figures began pointing fingers at each other right after news broke that the U.S. had been downgraded from a perfect AAA credit rating to a AA+ by Standard and Poor's.
Democrats immediately blamed the downgrade on tea party Republicans. On NBC's "Meet the Press," Sen. John Kerry, D-Mass., dubbed it "the tea party downgrade," condemning House Republicans for contributing to the "prolonged controversy over raising the statutory debt ceiling," which Standard and Poor's said influenced its decision to downgrade.
Utah's GOP delegation adamantly disagrees with Kerry — all of them voted against the bill that raised the debt ceiling, and all believe that the White House's continued government spending and the national debt are to blame for the nation's downgrade, not the tea party Republicans.
Yet, both parties are guilty of a far worse sin than the downgrade — together they've created a dangerous environment of market uncertainty, according to James R. Kearl, a professor of economics at Brigham Young University.
"Until we reverse the course of irresponsible spending, we are not only impeding our economy's ability to stabilize and prosper, we are (also) creating a crushing burden of debt for generations to come," said Utah Republican Sen. Mike Lee, reiterating the need for reduced market uncertainty. He also echoed the sentiments of President Barack Obama's chairman of the Joint Chief of Staffs, Admiral Mike Mullen, who said the biggest threat to national security is the federal debt level.
Republican Sen. Orrin Hatch could not agree more. "The reckless spending habits coming out of this White House and their liberal allies in Congress have put us in this fiscal fiasco," he said in a statement.
Even more adamant in condemning government spending for the downgrade this week was Hatch's likely primary challenger, Rep. Jason Chaffetz.
"My whole 2007 campaign was about the dangers of our national debt and restoring fiscal responsibility," said Chaffetz. "We actually offered a solution to cut, cap and balance that passed in the house — it was Senate Democrats and the White House who prevented passing a real long-term plan to solve our national debt problem."
With regard to claims that the tea party supporters are to blame for obstructing plans to raise the debt ceiling, Chaffetz pointed out that more House Democrats (95) voted against the bill than House Republicans (66).
Yet, House Republicans were much more focused on cutting spending and preventing tax increases than House Democrats. For example, Rep. Rob Bishop, R-Utah, said "the only way we are truly going to restore full confidence is if we completely overhaul current spending practices in Washington, D.C. This begins by disbursing the concentration of federal power back to the states and to the people."
Utah's lone Democrat in the delegation Rep. Jim Matheson, was more measured than his Republican colleagues in pointing fingers over the downgrade,
"Today was not a good day for U.S. markets as we continue to recover from the worst recession since the Great Depression," Matheson said Monday. "This is a reminder that now is the time to put politics aside and work in a bipartisan way to craft public policy that emphasizes long-term fiscal responsibility."
Matheson's call for bipartisan, long-term solutions was shared by prominent economists, who say both sides of the aisle are to blame for the state of the economy.
"The press has made a big deal over the downgrade but really the markets still trust the U.S. Treasury. The real problem that politicians have overlooked is the enormous uncertainty that caused the stock market to drop this week — both Republicans and Democrats are to blame for causing this uncertainty," said BYU economics professor Kearl. "This committee they formed just makes things worse creating more uncertainty because no one knows exactly what they will do."
Economists say the only real long-term solution lies in a mix of bipartisan cuts to so-called entitlements, like Medicare and Social Security, and increased federal revenues. Unfortunately, lawmakers face several challenges in putting these long-term solutions into law.54 comments on this story
"Large-scale reductions in entitlements are feasible only if phased in gradually—which would have to be done anyway in order to avoid a serious jolt to the current weak economy," said Richard Posner, a federal judge and renowned scholar of law and economics at the University of Chicago Law School, in a blog post last week. "The problem is that Congress cannot make credible long-term commitments to reduce spending because it cannot bind subsequent Congresses. The problem is exacerbated by the fact that both political parties are much fonder of increased spending than of increased taxes, so there is built-in momentum for increased government debt."